Proof of lawful possession of foreign exchange required, while penalty may be moderated on equitable grounds.

Possession of foreign exchange triggered a duty on the possessor to prove lawful ownership and entitlement under the Foreign Exchange Regulation Act, 1973. Because the appellant admitted possession but produced no documentary proof that the currency belonged to the father or that the father was legally entitled to hold it, the confiscation order and finding of contravention were upheld. The plea of breach of natural justice failed since an opportunity had been given before the adjudicating authority. On penalty, the appellant's limited means and inability to appear personally or through counsel justified moderation, and the monetary penalty was reduced while the contravention finding remained unchanged.

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Issues: (i) Whether the confiscation order and finding of contravention under the Foreign Exchange Regulation Act, 1973 were liable to be interfered with. (ii) Whether the penalty imposed required reduction in the facts and circumstances of the case.

Issue (i): Whether the confiscation order and finding of contravention under the Foreign Exchange Regulation Act, 1973 were liable to be interfered with.

Analysis: Foreign exchange was recovered from the appellant's possession, and once such possession was admitted, the burden lay on him to show lawful possession. No documentary material was produced to establish that the currency belonged to the father or that the father was legally entitled to hold foreign exchange. The plea of violation of natural justice was rejected because opportunity had been afforded to the appellant to place his case before the adjudicating authority.

Conclusion: The confiscation order and the finding of contravention were upheld.

Issue (ii): Whether the penalty imposed required reduction in the facts and circumstances of the case.

Analysis: The appellant's limited means and inability to appear personally or through counsel were taken into account, and the matter was considered fit for moderation on the question of penalty.

Conclusion: The penalty was reduced from Rs. 5,000 to Rs. 2,000.

Final Conclusion: The adjudication on contravention remained undisturbed, but the monetary penalty was scaled down in view of the appellant's circumstances.

Ratio Decidendi: Once foreign exchange is found in a person's possession, the person must prove lawful possession and entitlement, and the penalty may be moderated on equitable considerations without disturbing the finding of contravention.

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